Thursday - April 14, 2005
Want to view the archive of past issues? Go here.
Get the latest investment alert technology and receive the most up-to-date Profit from the Pros content as it’s published, in Real Time, with no waiting. Learn more about this free tool at: http://at.zacks.com/?id=1517.
1. FEATURED EXPERTS
Here we cast the spotlight on a timely Featured Expert commentary that recently appeared on Zacks.com. Following the article you will find previews of other profitable commentaries with insights and recommendations from leading investment experts.
Inflation concerns and the risk the Fed could bump rates more aggressively to combat it aren’t helping the overall financial markets. Crude oil flirting with $60 isn’t doing much good either. Both of these factors could weigh on consumer confidence and the overall strength in the economy going forward.
When Alan Greenspan starts mumbling about inflation, a number of things come to mind. We’ve all known higher interest rates are coming, and we’ve been getting them at a nicely “measured pace” until now (as expected, the Fed raised its benchmark interest rate 25 basis points to 2.75% last month).
That’s likely to continue. However, there is a risk we’ll see a 50-basis-point bump in May or June, or that the Fed will continue its measured pace longer than the talking heads are predicting. Either way, Jeff Manera considers it very unlikely we’ll see any more than 3.75% when all that measured dust settles. A healthy U.S. economy should have no problem with 3.50% or 3.75%.
More. . .
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Under a higher interest rate environment, with 30-year mortgage rates topping 6% again, new real estate investment and refinance activity will become less appealing. The rich equity many of us have locked up in our homes will be more likely to remain there, as opposed to being unleashed into the economy via low-interest rate home equity loans. Easy money and newfound wealth from appreciating real estate has been a meaningful factor the economic rebound we’ve been experiencing.
Also, the dollar could continue its recent recovery, opening unfamiliar (at least in recent years) frontiers of competition for our exporters, but also allowing us to get more bang for our import buck and attracting foreign investment to our less stingy yields (and possibly luring money away from our equity markets).
Even after Manera and his team removed many of the best performers from the equation, by taking a steady string of profits, and even with the recent weakness in several “doghouse” positions pulling down the portfolio’s performance, the Master List Portfolio as a whole is showing a very respectable total open profit of about 16%.
Thirteen Master List positions are handing total open profits (appreciation + any dividends since initial recommendation) of 20% or better, with six of those up 50% or better and three up more than 70%. Oneok (NYSE: OKE) remains the current star of the Master List, with total open gains of 134%!
This shows the magic of diversification in action. Manera strives to maintain a good number of well-diversified positions, currently 27, so that weakness in specific positions, as well as industries or sectors, will tend to be offset by strength in your other positions and their respective sectors/industries.
Hearst-Argyle TV (NYSE: HTV) continues to see steady, aggressive buying by its erstwhile parent, Hearst Broadcasting. Hearst, the parent, has snatched up more than 135,000 shares just since February! Manera believes it’s just a matter of time before they stop being coy and launch an official buyout offer for the remaining shares.
Since he believes this scenario to be so likely, Manera is lowering your stop on Hearst-Argyle to prevent you exiting on any minor dips.
Intuit (NASDQ: INTU) announced that sales of its TurboTax software were up 10% so far in the tax-filing season. TurboTax for the Web unit sales rose 16% and TurboTax federal desktop units sold through retail rose 12%. This is especially good news, since it should allay any fears that new free Web versions of TurboTax and the other tax prep software would hurt the market share of the paid versions. This position continues to look good.
Financial columnist Dan Dorfman - who has been around a long time and has seen a lot of so- called ``experts`` come and go – regarded the analytical work as sharp and perceptive. Superstock Investor doesn’t pretend to have a foolproof system. It offers a constant resource for original stock ideas that can provide a valuable balance for the portfolio of a serious investor. These are stocks that have something extra going for them creates returns – regardless of the overall stock market. Learn more about this newsletter and free trial offer at: http://at.zacks.com/?id=219.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Jim Collins explains that the movement in oil is going to
continue to lead the markets until we see a significant drop in
prices. Discover what this expert sees once oil prices fall and
read about some of his stock picks for the week. More...
Judy Alster and her team explain that airline stocks are a
direct play on falling crude and rising stocks. Discover why
the airline sector holds special promise if crude oil dips.
Then read about a pair of airline names that look ready for
strong rebounds. More...
Dan Sullivan says the weight of the evidence suggests that we
are still in a bull market, but stocks need to generate some
momentum to carry the averages higher. Read Sullivan’s
description of today’s market and take a look at one of his
highlighted mutual funds. More...
Dr. Melvin Pasternak says that for every 1 ¼ steps the S&P 500
moves forward, it takes a step back. Learn what this expert’s
technical analysis makes of the situation, and then read about
three stocks to watch. More...
Is it time to start buying steel? Gregory Spear outlines three
factors to consider when gauging the completeness of pullbacks.
Read about some of this expert’s favorite names in steel and in
Featured Expert articles are courtesy of the 60+ leading investment newsletters that have partnered with us to create the Zacks Expert Advice service. Check out the Experts section of Zacks.com daily to find profitable stock picks and timely market commentary at: http://at.zacks.com/?id=637.
2. BEST OF ZACKS INDEPENDENT RESEARCH
The analysts from Zacks Independent Research create a mountain of insightful equity research everyday of the week. Here you will find the best of that information recently published on Zacks.com.
BULL OF THE DAY
Ultrapar - ADR (UGP) - Growing Demand in Latin America
TC Pipelines (TCLP) - Below-Average MLP Performance
2005 Shaping Up to be the Year of the Buyout
Banks Stay Consistent, Positive
3. TRADING STRATEGIES: Profit Tracks
Zacks.com is proud to share with you some of the best trading strategies that truly allow you to Profit from the Pros. Today we highlight…
This Growth and Income Strategy is pretty straightforward, yet amazingly profitable. The goal is to find solid companies paying out extraordinary dividends. With money market rates being so low, we think many investors will find appeal in this strategy with minimum dividend yield of 8% plus attractive equity appreciation potential. This screen has the least turnover of any of the Profit Tracks and has shown excellent results with both 12 and 24 week holding periods. We know there are those of you who may be worried about too much REIT exposure in this type of strategy. The good news is that we have also backtested this strategy by removing REIT stocks and the results were still outstanding.
This Profit Track looks for stocks that are paying dividend yields of greater than 8% along with other attractive fundamental attributes. Although this a longer term and less risky screen, it has still beaten the S&P 500 every year including +49.2% in 2003 and +19.5% in 2004 (thru 12/3/04).
Glimcher Realty Trust (NYSE: GRT) During its fourth quarter and full year report from late February, Glimcher stated that 2004 represented the culmination of a multi-year strategy to improve asset quality and to reduce overall leverage, while maintaining the safety and security of its dividend. At about 8.08%, the company’s dividend yield remains well above the S&P 500 average. Furthermore, with the regional mall portfolio now contributing close to 95% of its NOI and with a debt to market cap of 52%, Glimcher is encouraged with its growth prospects for 2005 beyond. To continue your research on GRT, click here.
Iowa Telecommunications Services, Inc. (NYSE: IWA) has a dividend yield of approximately 8.29%, while this Profit Track only calls for a dividend yield at 8% or greater. The company reported a solid fiscal fourth quarter early last month, which included a revenue rise of +8.5% year-over-year, as its DSL service offering added 4,000 net subscribers during the quarter. Iowa Telecommunications Services intends to pay quarterly dividends at an annual rate of $1.62 per share, or about $50 million annually in total. In mid-March, the company’s Board declared a quarterly dividend of $0.405, payable on April 15, 2005 to shareholders of record at the close of business on March 31, 2005. The dividend represents the first full quarterly dividend payable to stockholders at the indicated annual dividend rate of $1.62. Iowa Telecommunications Services believes its well-positioned to continue its track record of strong operational and financial results. To continue your research on IWA, click here.
MCG Capital Corporation (NASDAQ: MCGC) provides financing and advisory services to a variety of small-and medium-sized companies throughout the U.S. with a focus on growth-oriented companies. The company, which reported fourth quarter earnings per share that topped both the year-ago result and the consensus in early March, has a dividend yield of about +11.03%. In that quarterly report, the company’s Board declared a dividend of 42 cents per share for the first quarter 2005 with a record date of March 14, 2005 and a payable date of April 28, 2005. To continue your research on MCGC, click here.
All the Profit Track strategies were created and backtested using the Research Wizard software from Zacks Investment Research. If you like this screening strategy, but want to narrow down the list of stocks and even improve the performance, then you should start a free trial to the this powerful stock picking tool. Learn more about the Research Wizard and Free Trial offer at: http://at.zacks.com/?id=1370
4. WEEKLY COMMENTARY: All Star Top Picks
Zacks.com offers 3 unique weekly commentaries that all further
our mission to help you Profit from the Pros. Today we will
uncover the current top picks of 5 Star analysts in a hot
sector (a.k.a. All Star Top Picks). Why? First, it makes sense
to tap into industries that have potential to outperform the
market. Second, within that sector you want to be on board the
stocks with the best prospects. To help us uncover these top
picks we employ the keen insights of 5-Star analysts. Who are
they? Check out the "About Zacks All Star Analyst Survey"
This week we explore the Integrated Oil Industry
The big news on Wall Street these days is oil. At the end of 2001, oil prices were at approximately $20/bbl, but these days consumers have to deal with oil prices that can well surpass $50/bbl. Yet many analysts are keeping some distance from oil- related industries, expecting a correction in commodity prices to bring the space back down to earth. While most people and analysts believe that $50 oil won’t be the norm in the long- term, they also agree that $20 oil isn’t around the corner either. Despite the infamous fluctuations in this space, many analysts continue to see a number of opportunities for investors. As such, the integrated oil industry currently has a Zacks Industry Rank of 2.33, according to Nick Raich’s “Weekly Earnings and Sector Update,” placing it 13th out of more than 200 industries.
Integrated oil companies, as well as other oil-related issues, have two major factors moving in their favor. Of course the main reason behind their success has been oil prices ranging from higher-than-average to extraordinary. In fact, WTI averaged approximately $50/bbl in the first quarter, which was higher than many had expected. But in addition to this, the high prices have not yet had a significant impact on oil demand growth. Consumers may complain about the situation, but gas prices at about $2.50 and a frightened market don’t appear to be making people more frugal. In fact, the preliminary estimates for the first quarter GDP don’t show much of variance from expectations.
But some analysts believe that the risk/reward ratio for oil isn’t very attractive right now. Lower oil prices moving forward and a snap-back for commodity prices are two reasons they give for staying away at the present moment. There is a lot of debate amongst analysts at the moment when it comes to this industry. Others suggest that any pullback in price be considered a buying opportunity, especially for long-term investors.
However, one point of similarity between the most bullish and the most bearish is that there are opportunities for profit. But it can be difficult to find those winners, especially in a space with prospects that span the gamut. Your best resource is the analysts whose business it is to stay on top of this hectic space. They can give you prospects on the overall industry with concise data to back it up, and also offer company-specific information to help you find those companies poised for success. Their help can help grease the market’s wheels and energize your portfolio for the rest of the year.
Who are the All Star Analysts of the Computer Storage Industry? What stocks do they recommend now? The answers to these questions are found in the remainder of this All Star Top Picks article at: http://at.zacks.com/?id=1451.
To see the full All Star Survey with access to all ratings, research and stock picks, then visit: http://at.zacks.com/?id=12.
These are the best stock picks from the best stock pickers in
the business. This portfolio only includes stocks recommended
by five or more of the 5-Star analysts based on stock picking
performance. Since inception in July 2002 it has gained +38.7%
outpacing the +27.3% return of the S&P 500. See the full
portfolio at: http://at.zacks.com/?id=13
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
SCREEN OF THE WEEK
Kevin Matras talks about ‘how’ he creates his winningest
screens. And see how you can too. Plus, get five news picks
from some of his best strategies. More...
ZACKS MARKET COMMENTARY
So far, so good for the first quarter earnings season. Use Nick
Raich's analysis and industry rankings to stay ahead of the
5. ZacksAdvisor.com TIMELY BUY of the WEEK
MEMC Electronic Materials (WFR)
MEMC is the world’s only publicly traded pure-play silicon wafer manufacturer. They produce and sell silicon wafers for the semiconductor industry, and are fourth worldwide in market share. MEMC sells its products to most of the semiconductor device manufacturers. The company has nine plants that are located near the major semiconductor markets in the U.S., Europe, and Asia.
The stock looks attractive to us for several reasons. We believe that the inventory overhang that has affected the semiconductor industry seems to be easing. MEMC is a generic way to play the semiconductors without getting too product specific. The company is also likely to benefit from a shortage of Polysilicon, which is a key raw material in wafer manufacturing. They are moving more towards 300mm wafers, which have higher prices and profit margins. MEMC has its own Polysilicon plants, which could result in market share gains over those who lack their own plants. Analysts have been raising estimates and the stock is attractively valued at 11X 2006 estimates.
Lehman Brothers maintained an "overweight" rating for MEMC last week, saying it expects "ongoing fundamental outperformance" to drive long-term multiple expansion. Lehman said recent checks indicated strong demand for 300 mm wafers driving upside potential. "Specifically, we believe several proprietary and incremental data points validate our conservative estimates, including successful first price negotiations, large customer pull in of 300mm production, and accelerating March and forward demand from customers in Taiwan," said Lehman. "We believe MEMC had the best first-quarter pricing negotiation results since 2000." The research firm raised the price target of MEMC to $23.40 from $15.
OTHER TOOLS FROM ZACKS
At the heart of Zacks Investment Research is the Zacks Rank investment philosophy that continues to vastly outperform the market. Our Zacks #1 Ranked (Strong Buys) have produced the following results for investors:
And just as importantly, our #5 Ranked stocks (Strong Sells) have alerted investors as to which stocks to dump from their portfolios to avoid unnecessary losses.
To truly take advantage of the Zacks Rank, you need to first understand how it works. That`s why we created the free special report; Zacks Rank Guide: Harnessing the Power of Earnings Estimate Revisions. Download a free copy now to prosper in the years to come at: http://at.zacks.com/?id=1424.
Or view the full list of Zacks #1 Ranked stocks at: http://at.zacks.com/?id=1423.
FREE PORTFOLIO TRACKER
Do you believe that these events affect stock prices?
If you answered yes, then how are you staying on top of these changes for your stocks? If you are one of the 45,000 investors who wake up every morning to the Daily Portfolio Updates emails from Zacks.com, then you are all set. If not, then sign up now to get this vital information sent to you daily to help take definitive action to improve your portfolio's performance. Did we mention it's free? Get started now!
We hope you enjoyed this issue of "Profit from the Pros", And we look forward to visiting with you again next week.
If you enjoy this e-mail newsletter, then please pass it along to a friend. Simply forward them the link below to sign up for their own free subscription. If you're reading a forwarded copy, sign up for your own, so you get this wealth of information every week. Just click here. THANKS!
Regards and Happy Investing,
p.s. What is the mission for Zacks Profit from the Pros? Click here to find out how we will help you become a more successful investor.
*The S&P 500 Index is a well-known, unmanaged index of the prices of 500 large-company common stocks, mainly blue-chip stocks, selected by Standard & Poor's. The S&P 500 Index assumes reinvestment of dividends but does not reflect advisory fees. An investor cannot invest directly in an index.
Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.
To contact us by mail:
Zacks Investment Research
To unsubscribe from receiving "Profit from the Pros" e-mail newsletter, click here.